For long, you have heard about the forex market and how a lot of people trade in it. After due research and follow up, you are ready to take the bold step into the forex market. There are important steps you need to take before you can buy or sell, decide on the particular currency to trade or the specific exchange to use for the transaction, you need to determine the best forex broker you will use. But what is a forex broker and what determines the best forex broker?
Here is a list of some of the best forex brokers out there
|Broker||Bonus||Min Deposit||Leverage||Review||Open Account|
|Switch and get $30||$5||1:1000||Review||Visit Broker|
|$200 Deposit Bonus||$200||400:1||Review||Visit Broker|
|200% up to $5000||$200||600:1||Review||Visit Broker|
Finding the Best Forex Broker
Finding the best forex broker while starting out as a forex trader can be a challenging experience, however it is advisable. A good forex broker can help to navigate the risks involved in the forex trade market. It can be a difficult task to figure out where to find a Forex trading broker or a brokerage that offers Forex trading services, and a bit of a challenge to make sure the broker or brokerage is reputable and can meet your wants and needs as a trader.
The retail forex market is so cluttered and competitive that trying to sift through all the available forex brokers without rules and guidelines to help you navigate the murky waters of forex trading is like finding a needle in a haystack. So this article is dedicated to helping you and being your guide. Below are some of the few requirements a forex trader that wants to succeed in the business should demand of his forex broker.
What do Forex Brokers Do?
Forex Brokers mainly enable access to the markets to all internet users, as well as:
- They provide customers with the market price of the various financial instrument.
- They discover a counter-party to channel the user request from the client.
- Help the client deliver the trading orders to the market.
- Inform the client about the outcome of the order.
- Some also act as withholding agent, calculating and paying taxes for the trader on the realized capital gains or on the generated capital gains, or by calculating and maintaining the capital losses if the trader has not yet made a profit with his work.
How to Choose the Best Forex Broker
Nowadays, the forex market has become so competitive that finding the perfect broker to deal with now looks like an uphill climb. Having to just go through the thousands of forex brokers on the market can be a huge task. The task can further become overwhelming when you don’t know what to look out for in a broker. Some brokers offer high leverage or low spreads and some don’t. Others offer copy trading or run very attractive promotions and live or demo contests.
In this section, we are going to reveal the kind of qualities and ideal forex broker must have before you should consider hiring him.
Regulated And Licensed
Trading with an unregulated and unlicensed forex broker is like keeping your money in an unlicensed banking institution, you are bound to get burned. One of the features of a good forex broker is regulation and licensing. In order for a forex broker to have access to the financial market, a license is required. A license assures you that the broker is legitimate and authorized. There are a lot of unlicensed forex brokers practicing and trading out there in the dark so before you take any step to tie yourself to any broker, ensure that the broker complies with local and international regulations and guidelines. If the broker does not respect laws and regulations, you can be sure it will not respect you.
A good forex broker ought to be highly secured, this is paramount. He is going to claim that he is legit. But this is not enough reason to trust him what your money. Choosing the best forex broker can be easy if you follow simple guideline outlined here. Ensure you conduct your own research about the activities of the broker on the market and get references before parting with your hard-earned funds. There are regulated agencies that dish out guidelines to forex brokers. These regulated forex brokers are mostly considered trustworthy.
There are a wide range of accounts to choose from when it comes to forex trading. It is important and paramount that your forex trader gives you options to choose from. A wide range of accounts that suits your needs is just one of the few services a good forex broker should provide. The power of choice goes a long way in forex trading as limitations and restraints can cause you to make the wrong trade which can cause you to lose money in forex trading. Picking the right account to trade with is very important so picking a forex trader that offers you choice is important.
A demo account offers you the chance to trade with virtual money, so there are no risks attached. It offers the prospective client the chance at a test run and a chance for the client to familiarize himself with the business of forex trading. A demo account is not just for beginner traders. It also offers a chance to know the broker’s capability, its analytic capabilities, the set of assets, which are available for trade, etc.If a broker offers the chance of a huge trading bonus without offering a free test run (demo account), such a broker is to be disregarded for untrustworthiness and it may not be very good at trading with real assets. A demo account helps you to ensure that the risks taken with a real account are reasonable and manageable.
You are going to incur some transaction costs irrespective of the currency you are trading. Each time you trade, you will be subject to pay for the commission or the spread. Hence, the more reason why you should go for the cheapest rate that is available. Most times, in a bid to get the most reliable broker, one might end up sacrificing a low transaction cost. In all, ensure you strike a balance between security and low transaction costs. Also, know the type of spread for your trading, before reviewing your available options.
The spread can simply be defined as the difference between the bid price and the ask price of a currency pair or any other assets. It is a huge red flag if the spreads offered by a broker are consistently high. It shows the broker to be making money at the expense of a trader. A good broker should always offer low spreads. This ensures that the trader makes money as well and this leads to the classic case of a win-win situation.
Wide Range of Trading Instruments
This is close related to account freedom and as was the case there, choice is a major factor. A good broker should offer the chance of choosing from a wide range of trading instruments. The more choice a prospective client has, the more good opportunity are realized. Diversification always reduces variation and risks. Your intermediary should give access to a vast variety of currency pairs, shares, commodities, and other trading instruments so as to provide you with safe payout in any case. Choose a broker that doesn’t just offer the Major currency pairs but also the Minors, the Exotics, precious metals and other commodities. Gold for example is a very popular trading instrument during times of economic and political instability.
In most cases, you will trade on the forex market through the broker’s trading platform. Ensure it is stable and user-friendly. The platform should not be masked with too much technical jargon and irrelevant information that is not related to your trading sessions. Before you choose a broker, ensure you cross check the trading platform to see what if is offering to traders. Does it have technical charting tools with a friendly user interface? Does the platform have all the necessary tools that you need to trade successfully there?
Your broker must fill in the best price possible for your orders. Such a price ought to be close to the market price indicated when you click sell or buy button.
Deposit and Withdrawal Methods
The only reason for entrusting your funds with a broker is to make a profit. Therefore, the broker has no reason to deny you that. Your broker holds your money to make trading easy and effortless. You should be able to withdraw and deposit without any hassle on your part.
A good forex broker must be reliable. Service reliability is not only about abiding rules and showing transparency. Good broker always respects its clients. It must have a customer service handled by ready-to-assist client agent. Apart from the tutorials, its customer service agent must be ready to assist any time, and make provision for interactions. A good forex broker always has the convenience of its client at heart and therefore ensures situations that will impinge of that convenience never arises or is at least kept to the barest minimum. Convenient cash deposits and withdrawals are merely requisite conditions. Making a choice of a good forex broker requires you to know which one respects your time and comfort, as well as financial freedom.
Customer Service Quality
Problems are unpredictable during trading. In order to ensure your forex broker is one you can easily communicate any issues that arose without causing any confusion in the process. A broker is as good as executing trades as he is when dealing with account challenges and technical issues. Most brokers are extremely kind and polite during the account opening and funding process, but after the deal is closed, they turn into terrible agents and they can hardly give you a listening ear to complain to in case problem arise.
There is no best Forex broker in the world, but If you are confident with your Forex broker, you will be capable of devoting considerably more time and precious attention to analysis and developing various FX strategies. Research prior to committing to a specific broker can go a long way and can improve a trader’s odds of being successful in the competitive foreign exchange market.
High Risk of Investment Warning
It is perfectly normal for your broker to let you know of good lucrative opportunities for trading as they arise. However, we must never forget that trading is fraught with risks. A forex broker that promises great returns at all times without warning of the risks involved should not be trusted. He does not show the full picture and withholding of information is one of the pitfalls of trading. It is like a surgeon that promises a patient that there are no risks involved in a surgery. This is trading and as is with everything in life, risk is involved. A good forex broker will always appraise the trader of the risks involved and advices how to manage that risk.
When looking to diversify your investment portfolio, choosing the right broker is half the work. Choose right and you are well on your way to sustainable profits, choose poorly, and you may be left with regrets and mounting losses.